The desire to take your business forward with an innovative new product without the funding to make it a reality can prove frustrating. It’s not just the entrepreneurs who fail to impress in the Dragon’s Den that can be left with their dreams in tatters – plenty of UK business leaders are hampered by the high cost of researching and developing their great ideas to bring them to market.
In what they’re calling a pioneering boost for small businesses, the government have launched a new plan on how they’ll make it easier for companies to invest in research and development by allowing businesses to claim tax relief and reduce their costs. The two-year outline aims to increase take-up of research and development (R&D) tax relief through raising awareness of it amongst small businesses and making it easier for them to apply.
The tax relief works by allowing businesses to reduce the amount of corporation tax they pay on profits by offsetting them against any investment in research and development. The new initiative called ‘Advance Assurance’ provides assurance to first-time claimants and, subject to meeting the criteria, the first R&D claims submitted will be accepted. There are plans to roll this out to larger companies in 2016.
HMRC evaluation shows that each £1 of tax foregone by R&D tax relief stimulates between £1.53 and £2.35 of additional R&D investment.
Financial Secretary to the Treasury David Gauke said:
“R&D is crucial for the long-term growth of the UK economy. Over 15,000 SMEs claimed the relief in 2013, an increase of around 19 per cent from the previous year, but we need to go further to support pioneering small businesses.
“That’s why we’ve published a document setting out our plans to increase awareness and make it easier for people to apply.”
Are you eligible for the tax relief for your business? Here’s our quick guide…
Can I apply for R&D relief for my business? Yes if…
- Your business is subject to UK corporation tax
- Your business undertakes qualifying R&D activities
Can I apply for Advance Assurance for my business? Yes if…
- You employ fewer than 50 staff
- You have a turnover of less than £2 million